Multinational Corporations Could Challenge U.S. and Korean Law Under the Korea FTA

Like NAFTA, the Korea FTA, as it is currently written, grants foreign corporations extraordinary rights and protections and empowers them to sue the U.S. government in foreign trade tribunals if the government enacts laws or regulations that may interfere with the corporations’ expected profits. These outrageous rules put the special interest of a few corporate entities on equal footing with our governments’ public interest policies.

If the pact were to go into effect, at least 79 Korea-based corporations with 270 establishments across the United States would obtain new rights to demand taxpayer compensation through challenges of U.S. federal, and state laws in foreign tribunals. There are also hundreds of the U.S. firms operating in Korea that could use the same system to attack Korean public interest laws.

Foreign investors have used NAFTA's investor tribunals to attack health and environmental policy, zoning and permitting issues, toxics regulation, court rulings, and more. The Korea FTA even allows foreign corporations to skirt US courts and use foreign tribunals to privately enforce the pact's rules limiting financial regulation. So, even the new policies to bring stability back to the financial system could be under threat if the Korea FTA is passed without modification. Already, multinational corporations have won millions of dollars in taxpayer money by challenging a Canadian environmental ban of gasoline additive MMT (the Ethyl case) and a Mexican municipality’s refusal to a grant construction permit for a toxic waste facility (the Metalclad case). In the Loewen vs. United States case, the NAFTA tribunal ruled that domestic court rulings in private contract disputes are subject to NAFTA investor-state claims, though the investor lost the case on procedural grounds due to its decision to reorganize as a U.S. corporation under bankruptcy protection. For a detailed account of how the Korea FTA endangers crucial public regulations, click here.

= Corporation based in Korea= Corporation based in third country with operations in U.S. and Korea

Finally, even non-U.S. or Korean multinational companies will be able to access these extreme foreign investor rights under the U.S.-Korea FTA. That’s right: companies from China, Europe and elsewhere could use a U.S. or Korean subsidiary to challenge Korean or U.S. laws! For instance, German companies like Siemens, Bayer, and BASF have operations in both the U.S. and Korea. By engaging in what corporate types call “nationality planning,” these companies too can access these investor rights.

Above is a map of the U.S. locations of multinational corporations that would gain new rights to sue the U.S. government under the Korea FTA. These corporations could challenge the local zoning and environmental laws of your community, so zoom in using the "+" button to see which corporations are in your city. Click on the dots to see the names of the corporations and their industry. Blue markers are corporations based in Korea and red markers are corporations based in third countries that have operations in both countries. The red lines on the map are the borders of the districts of the U.S. House of Representatives. Click here for a full list of companies based in Korea that operate in the United States.

The Korea FTA’s investor-state enforcement provisions also endanger Korea’s public regulations. U.S. corporations have already used trade pacts to attack public interest laws in foreign countries, such as laws that regulate gold mining in El Salvador. Click on the dots to see which companies will gain new rights under the Korea FTA (blue markers are corporations based in the United States and red markers are corporations based in third countries that have operations in both countries).

= Corporation based in the United States= Corporation based in third country with operations in U.S. and Korea

(Note: The format of Korean addresses necessitated placing many U.S. subsidiaries on the map according to their postal code rather than the exact street location. For the purposes of the map above, where postal code matching placed more than one subsidiary at the exact same coordinates, the positions of the subsidiaries was moved slightly apart to facilitate information access for the user. The source of much of the information in the maps is Uniworld's foreign firms database and the Investment Map of the International Trade Centre, www.intracen.org/marketanalysis)

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